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Preference Heterogeneity and Habit Persistence: The Case of Breakfast Cereal Consumption
Author(s) -
Thunström Linda
Publication year - 2010
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.2009.00228.x
Subject(s) - habit , persistence (discontinuity) , consumption (sociology) , multinomial logistic regression , economics , preference , breakfast cereal , econometrics , microeconomics , psychology , mathematics , statistics , biology , food science , social psychology , social science , geotechnical engineering , sociology , engineering
The efficiency of information, price campaigns and economic incentive policies related to food depend on the degree of habit persistence in food consumption. This paper estimates the strength of state dependence associated with breakfast cereal consumption and its heterogeneity across households, where positive state dependence implies habit persistence and negative state dependence implies variety seeking in consumption. The analysis uses a detailed micro‐level dataset from the research institute GfK Sweden on household breakfast cereal consumption in 2003. The analysis relies on a mixed multinomial logit model and finds breakfast cereal consumption is generally highly habitual. The degree of habit persistence, however, exhibits heterogeneity across households. In addition, some households can be characterised as variety seeking. The strength of habit persistence is similar across income and educational groups. The strength of habit persistence seems to be weaker for households with several adults and children compared with one‐adult households.